The 5 best budgeting systems for every income


Budgeting envelopes takes the most effort, but gives you the most control over where your money goes. If you tend to live paycheck after paycheck or spend more than you earn, you could benefit from this type of money management.

Budgeting for envelopes has traditionally been a cash-based system. It’s similar to the zero-based budget but involves setting spending limits for each category, even discretionary spending categories. You start by adding up your income and subtracting all the fixed monthly bills. If you have quarterly or annual invoices, be sure to include the monthly amount of these. You will also choose an amount to save each month and subtract it. Any money that is left should be divided into envelopes labeled with different categories of expenses, such as:

  • Groceries
  • Clothes
  • Household items
  • Personal care items
  • Dining out
  • Entertainment
  • Gas
  • Pets
  • Fitness costs
  • Donate to charity
  • Various

You need to track your spending and keep track of it inside the envelope. When the money is gone, you can no longer spend in this category. If you have money left in one of your envelopes at the end of the month, deposit it in your savings or add it to one of the envelopes for the following month.

If that sounds like a great way to stay on track, but you don’t want to use up cash, you can use a budgeting app that works the same. This way, you can still enjoy the rewards of credit cards. You just need to hold yourself accountable for meeting your spending limits in each category.

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